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  Method for guaranteeing a peer-to-peer loanUSPTO Application #: 20080052224Title: Method for guaranteeing a peer-to-peer loan Abstract: Guaranteed peer-to-peer lending in which loan payments between a borrower and a lender include an allocation to an account of a guarantor includes in one aspect a selection of borrower classes including a guaranteed class made available by a server to a first client machine. The server receives from lenders at respective first clients machines respective lender-parameters and respective selected borrower-classes. In the event that the selected borrower-class is the guaranteed class, the allocation of a portion of any loan payments to the collateral account of the guarantor is made automatically. In another aspect, offers are transmitted to lenders concerning a guarantee of any loan that satisfies the lender's parameters in exchange for a guarantor premium, which premium comprises a portion of any loan payments otherwise due to or collected by the lender for credit in to a collateral account of a guarantor. (end of abstract) Agent: Darby & Darby P.C. - New York, NY, US Inventor: Kwame Parker USPTO Applicaton #: 20080052224 - Class: 705 38 (USPTO) The Patent Description & Claims data below is from USPTO Patent Application 20080052224. Brief Patent Description - Full Patent Description - Patent Application Claims
FIELD OF INVENTION [0001]The present invention relates to improvements in facilitating the execution of peer-to-peer loans via electronic networks. BACKGROUND OF THE INVENTION [0002]Two major problems exist in the current loan system. Unsecured loans are not widely available to consumers, and when they are available, they are typically only for small amounts. Part of the reason is that unsecured loans are disfavored by financial institutions because they are not as easy to sell to major investors as are loans secured by property. A somewhat related problem is that smaller investors cannot take advantage of the lucrative business of investing in loans. [0003]The present invention addresses these problems by offering a pragmatic system and methodology for pairing investors who want to loan money (hereinafter referred to as "lenders") and borrowers who want unsecured loans. [0004]The present invention also addresses the risk of default associated with unsecured loans by enabling lenders to be paired with guarantors such that the unsecured loan can be insured against default. This encourages investors who may not normally be willing to take the risk of loaning money without collateral to make these unsecured loans to borrowers. [0005]Several advantages flow from this to both borrowers and lenders as described in the tables below. TABLE-US-00001 TABLE 1 Borrower Options and Advantages/Disadvantages Loan Type Advantages Disadvantages Peer-to-Peer Low borrowing rates Inability to pay credit-card borrowing Rapid online application style "minimum" payments; process based primarily on loans are amortizing credit score or other credit (mortgage style) rating system Ability to have an unlimited number of lenders compete for Borrowers business No restrictions on size and tenor of loan Low fees Unsecured Relatively rapid application High average loan rates, e.g., Loan process based primarily on for a three-year, $5000 credit score unsecured loan General limits on loan amounts (many institutions will not lend more than $5000) Product not heavily marketed by banks because of relatively low fees vs. other loan products (credit cards, home- based lending) Excessive late fees and related charges Credit Card Rapid application process Average loan rates for based primarily on borrowers credit "platinum" cards 12%; rates score for lesser cards up to 25% for Revolving credit means (i) lower-credit borrowers funds available at any time up Option to pay minimum to limit and (ii) ability to make payment can result in fiscal minimum payments without mismanagement (i.e. having to pay interest ballooning debt that can take Ability to use in thousands of years to pay off) worldwide point-of-sale locations Auto Loan Rates currently in the 6.28% Generally can be applied only to 7.26% range for good to vehicles under 5 years of credits age Secured by the automobile Cash-out Attractive rates; average Extensive and time-consuming Refinancing or 5.78% for 30 - year fixed-rate process (2 weeks 2 months) HEL/HELOC mortgage and 5.51% for a 5/1 Excessive processing fees ARM; average 6.65% 6.86% (legal, title, tax, origination) for a HELOC and Extensive documentation 7.64% 7.85% for an HEL requirements Home is placed directly at risk TABLE-US-00002 TABLE 2 Lending/Investment Options and Advantages/Disadvantages Invest- ment Type Advantages Disadvantages Peer-to- High lending rates compared Unsecured lending; lender has Peer to most fixed-income no direct recourse to lending investment options borrower's assets Ability to specify rate, tenor, and borrower risk profile Ability to trade in and out of investments at any point Ability to insure investment Low fees Money- Liquid securities with very Low rates (average yield Market low risk 3.2% 3.8%) Account Not insured Certificate FDIC insured (i.e. no risk) Low rates (average 12-month of Deposit securities up to the first CD yield at 4.3%) $100,000 investment Illiquid; investors must hold the security for period of time specified at purchase (typical tenor 6 months 1 year) Invest- Medium risk investment; can Average rates in the 4.5% to ment- also be purchased in a mutual 6% range not very attractive Grade fund to reduce risk Transaction costs (single- Bonds company bonds) or mutual fund fees can be excessive High- Very attractive rates on par High-risk investment Yield with Peer-to-Peer lending; including investment in Bonds rates in the 7% to 11% range emerging market economies Transaction costs (single- company bonds) or mutual fund fees can be excessive Based on the advantages and disadvantages traditionally available to the borrower and lender listed in Table 1 and Table 2, conventionally made peer-to-peer loans can be an attractive alternative for borrowers. However, such conventional loans have not necessarily been as attractive for lenders because one of the disadvantages is a serious one: the lender has no recourse if the borrower defaults. [0006]The present invention addresses this problem by providing the lender the peer-to-peer transaction with an opportunity to insure the loan by purchasing a guaranty from a guarantor. Under this methodology, the loan facilitator can accept offers from guarantors to receive a percentage of the principal (referred to as premium) in exchange for guaranteeing a peer-to-peer loan, arranged by a loan facilitator between a borrower and a lender. This new method of providing peer-to-peer loans with guaranties can remove the lender's principal concern regarding investments in peer-to-peer loans. With the high risk removed for lenders, peer-to-peer loans of the present invention provide borrowers with an excellent opportunity to borrow money without security and lenders the opportunity to earn a higher return on investment with reduced risk. SUMMARY OF THE INVENTION [0007]In accordance with one aspect of the invention, a method for managing loan payments in peer-to-peer lending environment between a borrower and a lender provides a guarantee to the lender. In accordance with this method, a server provides to a first client machine a selection of borrower classes including a guaranteed class. The server receives from lenders at respective first client machines respective lender-parameters and respective selected borrower-classes. The lender-parameters include, among other possibilities, an amount to lend, a term, and a lender-rate. In the event that the selected borrower-class is the guaranteed class, the method automatically allocates a portion of the loan payments to a collateral account of a guarantor. The method is preferably implemented programmatically under control of software operating on the server. [0008]In accordance with another aspect of the invention, a method for managing loan payments in peer-to-peer lending environment between a borrower and a lender introduces a guarantee offer to the lender. In accordance with this method, a server such as the server noted above provides to a first client machine a selection of borrower classes. The server receives from lenders at respective first client machines respective lender-parameters and respective selected borrower-classes. The lender-parameters include the parameters noted above. An offer is transmitted to the lender at a particular first client machine to guarantee any loan satisfying the lender parameters in exchange for a guarantor premium. In the event that the lender accepts the offer, the method automatically allocates a portion of any loan payments to a collateral account of a guarantor. [0009]In accordance with yet another aspect of the invention, a method for a lender to establish a loan comprises the steps of accessing from a client machine a web site hosted by a server, providing lending terms from the client machine to the server, the lending terms including an interest rate and a minimum credit rating, and funding a lender account with a dollar amount. Before funding any loan using money in the lender account, the method of this aspect of the invention includes the additional steps of reviewing at the client machine a third-party offer made available through the web site which offers to guarantee any loan satisfying the lending terms, and committing to pay a premium to the third-party in order to guarantee the loan. After funding the loan, at least one loan payment is received in the lender account. [0010]In accordance with still another aspect of the invention, a method for a guarantor to secure a loan comprises the steps of accessing from a client machine a web site hosted by a server and submitting guaranty terms from the client machine to the server, wherein the guaranty terms include a premium and a minimum credit rating. Before guaranteeing any loan using money in a collateral account, the method of this aspect of the invention includes the additional steps of examining at the client machine a required collateral to guarantee any loan satisfying the guaranty terms, posting the required collateral to a collateral account; agreeing to receive a premium from a third-party in order to guarantee the loan. After guaranteeing the loan, a guaranty premium is received as payment in the collateral account. [0011]These and other aspects, features and advantages can be combined together and further appreciated from the accompanying description of the illustrative embodiments and drawing figures thereof. BRIEF DESCRIPTION OF THE DRAWING FIGURES [0012]FIG. 1 illustrates an overview of the process of facilitating and servicing a guaranteed peer-to-peer loan according to one embodiment of the present invention. [0013]FIG. 2 illustrates an overview of another embodiment of the present invention for facilitating a guaranteed peer-to-peer loan transaction. [0014]FIG. 3 depicts components of an exemplary environment in which processes embodying the invention can be implemented. [0015]FIG. 4 illustrates a flow chart demonstrating a portion of the operation of an embodiment of the present invention from a loan facilitator's perspective. [0016]FIG. 4A continues the process flow of FIG. 4. [0017]FIG. 5 illustrates a flow chart demonstrating an embodiment of the present invention from a guarantor's perspective. Continue reading... Full patent description for Method for guaranteeing a peer-to-peer loan Brief Patent Description - Full Patent Description - Patent Application Claims Click on the above for other options relating to this Method for guaranteeing a peer-to-peer loan patent application. Patent Applications in related categories: 20080109348 - Credit system with over-limit analysis - An over-limit analysis system is presented for approving an over-limit amount in real-time and in response to a credit request from a borrower, which includes an over-limit amount. 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